Candlesticks, Fibonacci, and Chart Pattern Trading Tools : a synergistic Strategy to Enhance Profits and Reduce Risk

PHI-ELLIPSES ON CONSTANT SCALES
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market pricing to move out of them at their f inal points, our sample
investments follow the price pattern in the Japanese Yen cash cur-
rency with very few exceptions (see Figure 5.35).
Working with a constant scale feature is the only way in geo-
metrical chart analysis to achieve an undistorted picture over such a
long period.
It is often diff icult to believe in the power of the PHI-ellipse.
Trading with PHI-ellipses on daily data generates about one trade
Figure 5.35
Japanese Yen chart from 09–98 to 12–00. Attached and overlap-
ping PHI-ellipses on a constant scale.
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PHI-ELLIPSES
per month, depending on whether inside PHI-ellipses are found. The
pattern of inside PHI-ellipses can be seen in the time period from Sep-
tember 2000 to December 2000 in Figure 5.35, where three small
PHI-ellipses are contained within one bigger PHI-ellipse.
When we look at the charts, we realize it is necessary to adjust
PHI-ellipses dynamically to market price action. PHI-ellipses are
unique; not one PHI-ellipse is exactly like another even though the
shape is always the same. All PHI-ellipses in our sample calculation
have two elements in common: (1) Both sides of all PHI-ellipses are
touched, at least once during a price move, so that there is always a
3-wave pattern; and (2) all PHI-ellipses are at least 21 days long and
are drawn at a ratio smaller than 17.944 from the PHI series.
In addition, most PHI-ellipses start at the end of the preceding
PHI-ellipse. Only in an exceptional case (see April 1999, in Figure
5.35), does a PHI-ellipse start when the previous PHI-ellipse is only
half f inished.
Keeping in mind constant scales and the long-term picture of
market price patterns, we now move to the second sample: the S&P
500 Index.